Lost Affordability In Today’s Market

Most of the people who I know who own homes in Minneapolis, regardless of where they live in the city, have lost anywhere between 10% to 50% in the value of their homes over the past 3-4 years. While this is financially troubling for the 80,000 + homeowners in the city of Minneapolis, I believe we are potentially missing one of the greatest opportunities ever to increase the number of perpetually affordable homes in Minneapolis. Values of homes in majority of the neighborhoods where the CLCLT has been able to assist buyers purchase homes over the past 6 years have lost over $60,000 in value. In many instances even more. We as a community need to be purchasing as much as possible of the quality housing stock as possible today to create as much affordability as possible by through buying low.

Hundreds of investors are doing it because they know there is great value and great opportunity for profit in the transaction. We as a community need to view it the same way. Facts are facts. There are hundreds, if not thousands of homes that are selling significantly below what it would cost to rebuild or build new. The cost of materials will only go up and labor costs may never be lower that what they currently are. The majority of homes would cost at least $200,000 to build new today…making them an incredibly good value.

I’ve said to many that if I had $10 million dollars, I know I could easily double the investment in 10 years through residential real estate. It’s not a secret as investors are gobbling up homes because of the huge earning potential. Why don’t we see affordability in the same light? By buying low today, we can reep the affordability investments in the future creating opportunties for hundreds of low-income households and keeping investments and wealth in our communities. Minneapolis needs an affordabilty community land bank that banks on behalf of a land trust. For every $10 million invested today, we could reap the benefit for 1,000 households over the next 100 years ($100,000 per home today equals 100 homeowners initially multiplied by an average resale every 10 years). It seems irresponsible not to find a way to make these investments now.